Battle over budget ‘black hole’

The federal government has accused the opposition of having a “black hole" in its budget figures after shadow treasurer
Joe Hockey
confirmed plans to slash up to $70 billion from the bottom line but did not detail how it would be done.

Prime Minister
Julia Gillard
said Mr Hockey’s suggestion that the $70 billion could be found by eliminating government waste was ridiculous.

“You can only find that kind of money in the government’s budget if you say we’ll smash education right across the board, we’ll smash into the aged pension right across the board, we’ll smash into Medicare right across the board," she said in a statement.

Treasurer
Wayne Swan
said Mr Hockey had admitted to “a gigantic black hole in their books".

“It just shows yet again what a risk the Coalition would be to the economy at a time of global uncertainty," he said.

Mr Hockey confirmed on Friday the opposition was going through the budget “line by line and item by item" looking for spending cuts. It was unapologetic about the need to find cuts. “Finding $50, $60 or $70 billion is about identifying waste and identifying areas where you do not need to proceed with programs," he told the Seven Network’s Sunrise program.

Finance Minister
Penny Wong
said the opposition did not have a good record in detailing spending cuts, with Treasury finding holes in the Coalition’s list of spending cuts released before the last election.

She said the opposition had failed to explain how it could find savings to counter rejecting government taxes and savings measures.

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The opposition has flagged rejection of the mining tax, the carbon tax and the $37 billion national broadband network and Mr Hockey has raised the possibility of abolishing the Department of Climate Change.

But the opposition may match the government’s income tax cuts costing between $7 billion and $8 billion paid as compensation under the carbon pricing scheme and wants to reduce company tax.

Mr Hockey said a Liberal government would collect less tax and spend less than under Labor.

Ms Gillard acknowledged global uncertainty made the challenge of bringing the budget back to surplus by 2012-13 more difficult.

“We’ve seen some instability in global markets and some stresses and strains coming out of the US and also out of Europe. We believe that will have an impact on global growth and we’re not immune from that," she said.

“But it is certainly our objective to return the budget back to surplus . . . and we expect to achieve that."